There are other features that set companies apart. Companies may offer different types of payment plans and extras.

Some of these features will depend largely on who you purchase the policy from. Health care plans offered by your employer may offer different coverage than a policy you buy directly.

What types of policies do major insurance companies offer?

Most people with health insurance are on some type of comprehensive plan. The other types of insurance are basic coverage and supplemental health insurance. Both of theses last two plans use reimbursement methods to payout. When you see a doctor or receive treatment you will pay out of pocket.

After you submit a health insurance claim the company will pay you a preset amount directly. This may not be as much as you actually paid for the services.

What is the cheapest type of health insurance?

Basic coverage is the cheapest kind of policy, but only 25 states allow these policies for individuals and families. It covers a minimum of care like doctors’ visits, laboratory tests, and some surgical procedures.

Basic coverage policies typically do not cover emergency rooms, hospital stays, or prescriptions. They also will not cover any type of major or expensive illness and related treatments.

What if I need additional health insurance?

Supplemental insurance policies are designed to cover a specific illness or health problem. These types of policies can be written to cover things like cancer, heart disease or other major diseases.

Major medical insurance is a supplemental health insurance with a broader range. These policies will cover a list of medical diseases and major accidents.

How does comprehensive health insurance work?

The AARP explains that there are two main types of comprehensive health insurance plans: fee for service based and managed care. Managed care is also broken down into two categories, Preferred Provider Organizations (PPO) and Health Maintenance Organizations (HMO).

Fee for service based plans are often referred to as indemnity policies. These policies pay a partial amount for services. They will pay by percentage or a set amount depending on the type of health insurance policy you sign up for. You will pay the remaining portion but you are free to see any doctor or hospital you want.

Managed care plans utilize contracts with health care providers and facilities to establish a network. These contracts establish set prices that they will pay for services. You will have a deductible or co-pay depending on the policy you choose.

What is the difference between group insurance and private insurance?

Many large health insurance companies sell both group plans for employers and private insurance you can purchase on your own. Group plans do come with some added benefits because there are more regulations on what they must include. Group insurance policies offer guaranteed acceptance. There may be a waiting period before pre-existing conditions are covered.

When you purchase private insurance they can deny you coverage if you have a pre-existing coverage. The Affordable Care Act will no longer allow this as of 2014.

Group policies tend to offer more comprehensive coverage than private insurance. Employers usually offer a policy to all full time employees and sometimes part time employees too. This means the insurance company gets a large number of customers from one plan.

Finally large companies are required to offer Cobra insurance. Cobra insurance allows employees to keep their health insurance if they are laid off or quit for up to 18 months.

Your monthly premiums will be higher than what your employer charged though. Most employers pay some part of your premium but with Cobra you will pay the full cost plus a 2% handling fee.

Why would I choose private health insurance?

Many people are choosing private insurance over group insurance because there are more options and in some cases the premiums are lower. With private insurance you can shop for a policy that best fits your needs.

Private insurance may be cheaper than your employer’s group plan as well. While employers typically pay a percentage of your premium, these premiums may still be higher than what you might pay for private insurance. You also do not have to worry about health coverage if you decide to change jobs.

How do I choose a health insurance company?

Shopping for health insurance can be confusing. You should compare premiums and types of coverage. Look at the total cost including what type of co-pay and deductibles you will have.

Make sure the coverage offered fits your needs. Some coverage may be unnecessary but you also want to make sure you are covered in the event you have an unexpected illness or injury. Think about future needs as well as like family coverage if you plan on having kids.